The nevoid basal cell carcinoma syndrome (NBCCS) is an autosomal dominant disorder characterized by multiple basal cell carcinomas (BCCs), pits of the palms and soles, keratocysts of the jaw, and a variety of other tumors and developmental abnormalities. NBCCS was mapped to chromosome 9q22.3; and both familial and sporadic BCCs display loss of heterozygosity for markers in this region, consistent with the gene being a tumor suppressor. A human sequence (PTC) with strong homology to the Drosophila segment polarity gene, patched, was isolated from a YAC and cosmid contig of the NBCCS region and shown to be expressed in many of the tissues affected in NBCCS patients. Hydropathy analysis suggests that human patched is an integral membrane protein with a pattern of hydrophobic and hydrophilic stretches similar to that of Drosophila patched. In the developing mouse embryo, patched is initially detected within the ventral neural tube and later in the somites and limb buds. Expression in the limb buds is restricted to posterior ectoderm surrounding the zone of polarizing activity. The results show that patched is expressed in a complementary pattern to Sonic hedgehog, a murine homologue of Drosophila hedgehog and suggest that patched/hedgehog interactions have been conserved during evolution. Single-stranded conformation polymorphism analysis and sequencing revealed mutations of PTC in patients with the syndrome and in related tumors. We propose that a reduction in expression of the patched gene can lead to the developmental abnormalities observed in the syndrome and that complete loss of patched function contributes to transformation of certain cell types.